Question

Suppose the market for good X has a four-firm concentration ratio of 0.50. Furthermore, assume that total sales in the industry are $1.2 million. Based on this information, we know that sales for the largest four firms in the industry equal (in aggregate):

A) $240,000.
B) $2,400,000.
C) $600,000.
D) $60,000.

Answer 1

Answer: C -$600,000

Explanation: Concentration ratio is the addition of the market share of the largest firms in an industry.

The sales of the 4 largest firms = 0.5 × 1.2 million = $600,000

I hope my answer helps you.